Almost a billion dollars a month in trouble. This is the result of Zuckerberg’s metaverse dream

The metaverse was so important to Mark Zuckerberg that he even changed his main brand last year because of it, among other things. However, interest in its “meta” activities is so far lukewarm, and the company has already burned eighteen billion dollars on the development of the metaverse since 2020.

Reality Labs, the corporate division that has been tirelessly embroidering Zuckerberg’s dream of digital dominance over the phenomenon of shared virtual realities, has a cost item of $2.8 billion for this year’s second quarter. With quarterly sales of 28.8 billion, this is almost a tenth of Meta’s (formerly Facebook) revenue.

For the past quarter, the division reported income of only 452 million dollars, which is 242 million dollars less than in the previous quarter, when it recorded a loss of 2.9 billion dollars.

The company even had to resort to the unpopular step of raising the price of its flagship VR headset for virtual reality, the Oculus Quest 2, which will definitely not help the further adoption of the technology from which Meta hopes so much.

The situation is not greatly improved by the falling advertising revenues, which resulted in the fact that the sales of the entire Met fell slightly for the first time in its history. The profit itself is down by exactly 36 percent. While in 2021 the price per ad increased by 47 percent, in the second quarter of this year, on the contrary, it is fourteen percent lower.

On the other hand, who apparently doesn’t think that Reality Labs’ efforts to dominate the metaverse world are just a black hole for Meta’s money is the US Federal Trade Commission (FTC).

Last Wednesday, she opposed the company’s intention to buy Within Unlimited, a company that develops applications for virtual reality and is particularly successful in the fitness field, where it celebrates the success of its application Supernatural. The FTC sees it clearly: Meta is trying to monopolize the metaverse and virtual reality market, and it needs to be caught.

John Newman of the FTC adds: “Meta – originally Facebook – is already a key player in the virtual reality world. Its VR empire includes best-selling hardware, an app store, seven of the most successful developers in the sector, and one of the most successful apps. Yet, instead of healthy competition, they try to buy their way to the top. This is an illegal acquisition.”

Meta understandably disagrees with the FTC’s accusations and considers it misguided and even illegal, but it did not provide convincing arguments, as you can judge for yourself in the official company response.

The fact is that the FTC has a long history of challenging the business practices of the Zuckerberg empire. He already antagonized the commission with the acquisition of Instagram in 2012, and it has been going on with him ever since. The penultimate attack against the company, which was still called Facebook at the time, dates back to 2020, when it accused the company of monopolistic behavior on the application market.

A money black hole, a slowing backbone business, and the wrath of a US regulator looks like a recipe for a pretty toxic mix. Is Meta, currently trading on the exchange at prices last seen by the market in March and April 2020, still an interesting investment opportunity today?

Czech investor, economist and entrepreneur Jaroslav Šura is quite clear about this: “Facebook announced in advance that building a metaverse empire would cost something.” I would definitely not sell shares of the company at today’s prices. But that does not mean that I would advise anyone to buy now,” he says.

“I would rather invest more free capital in, for example, Microsoft, if we are talking about the big tech segment. If I had to choose between advertising platform operators, I would definitely rather consider Google,” he adds.